Samsung Electronics, the world's No. 2 mobile phone maker, gave an upbeat forecast for 2009 mobile phone sales due to sharp growth in touchscreen models, but surging sales may not guarantee higher margins.
Growing competition for market share could put Samsung under pressure to lower prices in the high-margin touchscreen phones, with iPhone's debut in the domestic market last week set to challenge Samsung and home-town rival LG Electronics.
Touch phones taking a bigger portion of handset sales will not likely have a significant impact on profitability because makers eventually have to cut prices to appeal to the wider public, said Hanwha Securities analyst Seo Do-won.
What we have to set sight on is the smartphone market, in which Samsung is still weaker than Apple, RIM and Nokia . Samsung has strengths in high-function and hardware sides, but is weak in software and services compared with rivals, Seo said.
Samsung, which trails Finland's Nokia, said on Monday it was on track to exceed its 2009 mobile phone sales target, with touchscreen models enjoying sharp growth.
It had previously said it aimed to sell more than 200 million phones this year, after selling slightly less than that figure in 2008.
The blockbuster iPhone of Apple made its debut in South Korea last week after local regulators cleared the final hurdle for its sales in a market that is home to 47 million mobile phone users.
With established strength in premium and feature phones, Samsung and LG have recently boosted their smartphone line-ups to compete with Apple and Blackberry maker Research In Motion .
Samsung said its global market share in handsets rose over 20 percent for the first time in the third quarter, with its telecom unit posting a profit margin of 10 percent in the third quarter, unchanged from the second quarter.
Research firm Gartner said this month global mobile phone sales this year would be roughly on par with 2008 and grow 5-8 percent next year.
TOUCHSCREEN MODELS BOOM
Samsung said in a statement handsets adopting full touchscreens would account for about 20 percent of its mobile phone sales this year. In 2008, such phones made up only 5 percent of Samsung's total sales.
Samsung had sold around 40 million full touchscreen devices between January and November this year, compared with 10 million in 2008.
Feature-packed premium phones and smartphones with intuitive user interfaces have prompted a boom in touchscreen models that allow users to manipulate cellphones more easily.
Samsung will continue to expand the global full touch phone market by introducing phones tailored to individual regions and user requirement with stylish designs, intuitive UIs and cutting edge features, JK Shin, head of Samsung Electronics' Mobile Communications Division, said in the statement.
Samsung Mobile Display, Samsung Electronics' mobile screen venture, expects touchscreens to be adopted by about 50 percent of major portable devices -- mobile phones, digital cameras, navigations and digital media players -- sold in 2013.
By afternoon, shares of Samsung, also the world's largest maker of memory chips and flat screen televisions, were up 2.3 percent, in line with the broader market's <.KS11> 2.5 percent gain.
(Reporting by Rhee So-eui, Kim Yeon-hee and Shin Jieun; Editing by Jonathan Hopfner and Muralikumar Anantharaman)